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Spillovers in Sports Leagues with Promotion and Relegation

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  • Helmut Dietl
  • Martin Grossmann
  • Andreas Hefti
  • Markus Lang

Abstract

type="main" xml:id="sjpe12060-abs-0001"> This paper analyzes spillover effects in sports leagues that are embedded in a system of promotion and relegation. Based on a contest model of a professional sports league with a top division and a second division, we show that league prizes and club efficiencies have opposing effects; while a stronger second division that offers a higher league prize leads to a more balanced top division, the opposite is true for a stronger second division whose clubs become more cost efficient. Moreover, we demonstrate that a higher second-division prize induces a lower investment level, but higher profits in the top division, while higher club efficiency in the second division leads to both a lower investment level and lower profits in the top division. These results have important policy implications for the organization of sports leagues.

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  • Helmut Dietl & Martin Grossmann & Andreas Hefti & Markus Lang, 2015. "Spillovers in Sports Leagues with Promotion and Relegation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(1), pages 59-74, February.
    • Handle: RePEc:bla:scotjp:v:62:y:2015:i:1:p:59-74
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    File URL: http://hdl.handle.net/10.1111/sjpe.2015.62.issue-1
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    1. Gábor Rappai & Diána Ivett Fűrész, 2024. "Domestic Competitive Imbalance as the “Price†of Surprise in the Champions League," Journal of Sports Economics, , vol. 25(2), pages 231-256, February.
    2. Thadeu Gasparetto & Angel Barajas, 2022. "Wage Dispersion and Team Performance: The Moderation Role of Club Size," Journal of Sports Economics, , vol. 23(5), pages 548-566, June.
    3. Marco Runkel, 2022. "Player Mobility and Competitive Balance Regulation in Professional Sports Leagues," Journal of Sports Economics, , vol. 23(4), pages 479-500, May.
    4. Peter J. Sloane, 2015. "The Economics of Professional Football Revisited," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(1), pages 1-7, February.
    5. Hefti, Andreas, 2016. "On the relationship between uniqueness and stability in sum-aggregative, symmetric and general differentiable games," Mathematical Social Sciences, Elsevier, vol. 80(C), pages 83-96.

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